but if Pepsi discounts, Coke is better off also discounting.
In this case, Coke can rule out Pepsi maintaining price (that is a dominated
strategy), and conclude that Pepsi will discount; Coke can therefore iterate to a
dominantstrategy,whichistodiscount.Thustheequilibriumisthesameasbefore.
c. Nash equilibrium
The situation becomes more complicated when neither player has a dominant
strategy. This is illustrated in Table 9.5. Note that this is no longer a Prisoner’s